APPIAN Capital Advisory will claim compensation of at least $600m from Sibanye-Stillwater in a legal case scheduled to take place next year, a market source said.
On October 10, the High Court of England and Wales judged Sibanye-Stillwater was not justified in cancelling a 2021 deal to buy two mines from Appian Capital Advisory, Santa Rita and Serrote, both in Brazil.
Sibanye-Stillwater was incorrect in believing a geotechnical event at Santa Rita comprised a ‘material adverse event’, the court ruled. A material adverse event is a clause in a share purchase agreement enabling the buyer to cancel a transaction.
As a result of this finding, legal proceedings will now move to a second phase via trial in late 2025 in which the size of a potential compensation claim will be weighed.
Sibanye-Stillwater said earlier on Monday that Appian “currently claims damages of up to $522m”. This comprised the difference between the purchase price under the SPAs and the market value of the Shares in the mines, the costs and expenses associated with the resale process and management of the mines, and pre-judgment interest.
“There is likely to be at least $100m in interest that will be added to its existing claim,” a market source told Miningmx.
Sibanye-Stillwater’s original offer for the mines, held in unlisted subsidiary companies Atlantic Nickel (Santa Rita) and Mineração Vale Verde (Serrote) comprised $1bn in cash plus a net smelter return that at the time was valued at $218m.
However, the South Africans will claim that Appian Capital had ample opportunity to sell the two mines having received three separate offers, all in excess of $1bn, but all of which were not consummated.
It will also say that since pulling out of the SPA for Santa Rita and Serrote, Appian has earned $260m in Ebitda from Santa Rita.
Appian Advisory Capital was founded by Michael Scherb in 2011. The company bought a controlling stake in Namibia’s historic zinc miner, Rosh Pinah and has investments in gold (Roxgold), Potash (Western Potash Corp.), rare earths (Peak Rare Earths) and cobalt (US Strategic Metals).
“The $522m in damages claimed by Appian equate to R2.84/share (gross) at spot FX,” said RMB Morgan Stanley in a report on Sibanye-Stillwater today.
“In our view, the outcome of the damages trial is significantly uncertain as to not warrant an adjustment to our price target of R17.50/share at this stage; our bear base of R5/share provides sufficient leeway in a negative scenario,” it said the Johannesburg-listed share.
